Question: Notable Nothings plans to issue new bonds with the same yield as its existing bonds. The existing bonds have a coupon rate of interest equal

Notable Nothings plans to issue new bonds with

the same yield as its existing bonds. The existing

bonds have a coupon rate of interest equal

to 5.6 percent (semiannual interest payments),

12 years remaining until maturity, and a $1,000

maturity value; they are currently selling for

$918 each. (a) If Notable issues new bonds today,

what will be its before-tax cost of debt?

(b) What will be its before-tax cost of debt if the

price of its existing bonds is $730 when Notable

issues the new bonds?

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